Most people have heard they should think about getting a “living
trust,” but do you really need it? There is no simple answer to
that question. Generally, the more complex your estate
the greater your need for a proper estate planning, and a revocable living
trust can be an essential component of an estate plan.
What is a Revocable Living Trust? Living Trusts are one of the most misunderstood estate documents. It is
an estate planning instrument used, somewhat like a will, to determine
when, how, and to whom your estate will pass. Also, Living Trusts covers
three phases of the Trustee’s life – while the Trustee is
alive and well, if the Trustee becomes mentally or physically incapacitated,
and after the Trustee dies.
Who participates in a Revocable Living Trust? A revocable living trust normally consists of three parts:
The settlor, the trustee and the beneficiary.
The Settlor: Also known as the grantor or trustor, is the person that creates the trust
and provides funds for it. More than one person can be a Settlor of a
trust, such as when a husband and wife join together.
The Trustee: This is the person who holds title to the trust and manages it. The settlor
often serves as the trustee during his or her lifetime or it can be the
person who the settlor appoints upon death, such as a spouse or child.
The Beneficiary: This is the person or entity that will receive the income or principal
from the trust.
How does a Revocable Living Trust differ from a Will?Unlike a will, a revocable living trust takes effect prior to death in
the event that you are incapacitated or disabled. It allows you to spell
out how you want your property managed while you are living, while a will
comes into play only after your death. In addition, a revocable living
trust operates outside the probate system and the terms are private. Furthermore,
it can place conditions and controls on the transfer of your assets to
your heirs which may be desirable if you have young children or heirs
with special needs. Depending on the size and complexity of your estate,
it also may grant a significant estate tax benefit to you and your heirs
by preserving certain spousal tax credits and deductions not available
under a standard will or probate.
Do I still need both a Will with a Revocable Living Trust?Yes, the trust only pertains to those items placed (or funded) into the
trust. If there are assets not funded into the trust, then a Will is useful
for instructing your loved ones what to do with those assets.
Which one is right for you? Consultation with a qualified attorney should always be part of your estate
planning and trust. Contact Owens and Perkins for all of your estate
planning needs. Our experienced attorneys are available to discuss your
individual situation and create an appropriate estate plan and all applicable